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tax risk insurance
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Optimizing the value of tax risk insurance - Practical insights webinar eversheds-sutherland.com 1 day ago 24 facts
claimTax risk insurance provides coverage for specific, identified tax risks, which are typically those uncovered during due diligence processes.
claimTo optimize the value of tax risk insurance, taxpayers should invest early in high-quality technical advice from reputable advisors with relevant jurisdictional experience.
claimEversheds Sutherland hosted a webinar on 25 March 2026 regarding the landscape of tax risk insurance and its role in managing transactional and non-transactional tax exposures.
claimDelays and limitations in tax authority rulings in the US are driving greater reliance on insurance to achieve transactional certainty.
claimActive participation in underwriting by the taxpayer helps accelerate timelines and strengthen coverage outcomes for tax risk insurance.
claimThe US market is experiencing growth in insurance for state and local tax exposures, including residency changes and sales and use tax issues.
claimIn Germany, the tax risk insurance market is characterized by a strong focus on real estate transfer tax, driven by frequent legislative changes and complex ownership structures.
claimThe global tax risk insurance market is experiencing significant growth, characterized by increasing insurer capacity, broader risk appetite, and rising claims activity.
claimTax risk insurance does not cover high-risk issues, pure detection risk, or marketed avoidance schemes.
claimTo ensure adequate policy limits for tax risk insurance, taxpayers should carefully quantify tax, interest, penalties, defence costs, and potential gross-up.
claimIn M&A transactions, tax risk insurance enables a 'clean exit' for sellers by removing the need for indemnities or escrow, and provides buyers with the security of insurer covenant strength, which is often stronger than that of individual sellers.
claimTax risk insurance provides certainty faster than tax authority clearances, which can take months and may not be definitive.
claimTax risk insurance has evolved from a niche, expensive product into a mainstream tool with wide global adoption.
claimIn the US, renewable energy credit coverage has become standard in many transactions.
claimTax risk insurance policyholders should treat their policies as living documents to ensure ongoing compliance with notification and conduct obligations.
claimTax risk insurance allows businesses to unlock transactions, achieve certainty, reduce balance-sheet volatility, and navigate ambiguity as tax rules become more complex and enforcement levels rise.
claimTaxpayers should choose brokers and insurers for tax risk insurance based on expertise and track record rather than purely on premium cost.
claimOutside of M&A, tax risk insurance is used to release provisions, address historic tax exposures, and support refinancings or corporate restructurings.
claimTax risk insurance helps unblock M&A transactions where tax uncertainty is creating negotiation deadlock.
claimThere is growing interest in Germany for insuring exit tax exposures related to corporate migrations.
procedureThe process for obtaining tax risk insurance involves six steps: (1) submission of the risk to the market via a broker, (2) insurers provide non-binding indications (NBIs), (3) selection of preferred insurer, (4) detailed underwriting and Q&A, (5) policy drafting and negotiation, and (6) binding of the policy and premium payment.
claimTax risk insurance is designed for known, technically defensible risks, whereas Warranty & Indemnity (W&I) or Representations & Warranties (R&W) insurance covers unknown risks.
claimTax risk insurance processes run fastest when taxpayers provide robust technical analysis and clear documentation upfront.
claimEarly discussions are emerging in the UK and Europe regarding the insurance of Pillar Two-related tax risks, though market practice remains in development.